Economic Production Quantity refers to the number of unit the company should add to the inventory and the production is made to minimize the total inventory cost. It maintain a balance between setup costs and carrying costs.
QUESTION 2 A company is about to begin production of a new product. The manager of the department wants to know how often the machine used to produce the current item will be available for the produc...
I Think I have the first part down. I just need help on the last four questions with the 12 day cycle. Thank you! A company is about to begin production of a new product. The manager of the department wants to know how often the machine used to produce the current item will be available for the production of the new product. The machine produces the current item at a rate of 170 units a day. 80 units will...
A company is about to begin production of a new product. The manager of the department that will produce one of the components for the product wants to know how often the machine used to produce the item will be available for other work. The machine will produce the item at a rate of 200 units a day. Eighty units will be used daily in assembling the final product. Assembly will take place five days a week, 50 weeks a...
A product has annual demand of 100,000 units. The plant manager wants production to follow a four-hour cycle. Based on the following data, what setup cost will enable the desired production cycle? d=800 per day (250 days per year), p=4000 units per day, H=$40 per unit per year, and Q=400 (demand for four hours, half a day).
Your company plans to produce a product for two more years and then to shut down production. You are considering replacing an old machine used in production with a new machine. The Old machine originally cost $ 717 and was bought Three (3) years ago (i.e. it has depreciated for three years). It could be sold today for $ 255 or sold in two years for $ 162 . The New machine would cost $ 786 and could be sold...
A production manager wants to upgrade the manufacturing system by adding a new machine. He found that one of two machines can effectively be used; their cost data are given in Table Q3 below: Table Q3 Alternative Machines Cost Element M/C I M/C II First cost Anual Maintenance Operating cost/hr Useful life Salvage value £150,000 £3000 £1.6 6 years £10,000 £250,000 £3500 £1.2 8 years £25,000 Using an interest rate of 15% per year compounded annually, answer the following: What is the...
Qwerty Corp. is about to begin production on two homes in a new housing subdivision. Qwerty Corp. anticipates that it will need 80,000 square feet of lumber over its 450 day construction cycle. Ordering and holding costs are $6/order and $8/sq.ft., respectively. Qwerty Corp.'s turnaround time on a lumber order is 2 days. Round intermediate calculations, but round final answer to 2 decimal places. Part 1. How many orders should Qwerty Corp. make to minimize inventory costs? Part 2. At...
The Boilermakers is a manufacturing company that uses gear assemblies to produce four different models of mountain bikes. One of these gear assemblies, the "Smooth Shifter," is used for the two most expensive models, and has an estimated annual demand of 540 units. The Boilermakers estimates the cost to place an order is $100, and the holding cost for each assembly is $10 per month. a) Currently, not knowing about EOQ, the purchasing manager places an order for the Smooth...
Colt Company owns a machine that can produce two specialized products. Production time for Product TLX is three units per hour and for Product MTV is four units per hour. The machine's capacity is 2.100 hours per year. Both products are sold to a single customer who has agreed to buy all of the company's output up to a maximum of 3,570 units of Product TLX and 4130 units of Product MTV. Selling prices and variable costs per unit to...
A company manufactures product X which it sells for $5 per unit. Variable costs of production are currently $3 per unit. A new machine is available which would cost $90,000 but which could be used to make product X for a variable cost of only $2.50 per unit. However, when the company decides to invest in this new machine, it would increase its fixed costs by $7,500 a year as a direct result of purchasing the machine. The machine would...
The Try to Have Just One' (THJO) sunflower seed company roasts and seasons sunflower seeds (in shell). For their production, they require a specific type of oil that they source from a local supplier; the leadtime on orders is 3 days. The oil comes in a box that is lined with plastic, with each box of oil costing THJO $48. Demand averages 50 boxes per day, with a standard deviation of 24.45 (assume that they run production 365 days/year). Ordering...